4Q14 Results. COPEL records net income of R$ million in the 4Q14. Highlights

Transcription

1 4Q14 Results COPEL records net income of R$ million in the 4Q14 Curitiba, Brazil, March 20, 2015 Companhia Paranaense de Energia - COPEL (NYSE: ELPVY, ELP / LATIBEX: XCOP / BM&FBovespa: CPLE3, CPLE5, CPLE6), a company that generates, transmits, distributes th and sells power, announces its results for the 4 quarter of COPEL s consolidated balance sheet presents the figures of its wholly owned subsidiaries, controlled companies and investees. The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and with accounting practices adopted in Brazil. Highlights Recognition of R$1,041.1 million of net sectoral financial assets; Impairment loss of R$ million in generation assets; Cost of energy purchased increased by 63.4%; Net income totaled R$ million in 4Q14; EBITDA stood at R$ million in 4Q14, 97.7% up on 4Q13; Copel Distribuição s Captive Market grows 7.2% in the period. 4Q14 Results Conference Call 4Q14 (1) Net Operating Revenues (R$ million) Monday, March 23, 2015, at 3:00 p.m. (Brasília time) Telephone (+1 516) Code: COPEL Price CPLE6 R$ % Index 0.2% % Points Var. 50, % IEE 27, % Dow Jones 17, % 1, % in 2014 Market value 12/31/2014 R$ 8.2 billion Var. % (4/5) 3,287 2, ,919 9, ,858 1, Net Income (R$ million) ,336 1, Earnings per share (R$) , EBITDA (R$ million) ,340 Return on Shareholders' Equity (annualized)¹ 8.6% 7.4% 5.9% % 7,273 6,889 6, % ,224 27, (55.2) 2,239 1, % 15.1% 10.7% % 19.9% (15.6) Operating Margin 8.1% 9.9% 6.0% % 16.4% (18.7) Net Margin 6.1% 7.1% 7.3% (16.8) 9.6% 12.0% (20.0) ¹ Calculated according to the initial shareholders' equity for the year. ² Includes contributions and advances for future investments and capital increases. Values subject to rounding adjustments. Average Rates (R$/MWh) Dec/14 Sep/14 Jun/14 Mar/14 Dec/13 Sep/13 1 Ibovespa Latibex 2013 (5) 1 R$ % XCOP 2014 (4) 362 Capex² CPLE3 ELP US$ Var. Var. % (1/3) 4,462 EBITDA Margin Ticker 4Q13 (3) Operating Income (R$ million) Energy Supply (GWh) Quotes - 12/31/2014 3Q14 (2) Power Purchase Average Rate - Copel Distribuição Retail Average Rate - Copel Distribuição Sales to Distributors Average Rate - Copel GeT Indicators Equity Dec/14 Sep/14 Jun/14 Mar/14 Dec/13 Sep/13 13,683 13,753 13,520 13,503 12,929 Net debt 4,723 3,170 3,103 2,817 2,280 1,370 Book Value per Share Net debt/ Shareholders' Net Equity 44.2% 41.1% 42.2% 33.6% 35.1% 26.8% Current Liquidity ,

2 LIST OF CONTENTS 1. Main Events in the Period 3 2. Financial Performance Operating Revenues Operating Costs and Expenses Equity in the Earnings of Subsidiaries EBITDA Financial Result Consolidated Net Income Adjusted Consolidated Net Income Consolidated Income Statement Consolidated Balance Sheet Assets Liabilities Performance of the Main Companies Copel Geração e Transmissão Copel Distribuição Copel Telecomunicações UEG Araucária Investment Program Power Market and Tariffs Captive Market Copel Distribuição Grid Market (TUSD) Electricity Sales Total Energy Sold Energy Flow Tariffs Capital Market Capital Stock Stock Performance Dividends and Interest on Own Capital Operating Performance Generation Transmission Distribution Telecommunications Equity Interests New Projects Other Information Human Resources Main Operational Indicators Q14 Results Conference Call 50 Exhibit I Consolidated Cash Flow Statement 51 Exhibit II Financial Statements Wholly Owned Subsidiaries 52 Exhibit III Financial Statements by Company 55 2

3 1. Main Events in the Period COPEL s net income totaled R$270.9 million in 4Q14, 52.0% more than the R$178.2 million recorded in 4Q13, due to the (a) recognition of R$1,041.1 million in net sectoral financial assets and liabilities, (b) growth in electricity sales to final customers and distributors due (i) the increase of 24.86% in Copel Distribuição s tariffs as of June 2014, and (ii) the sale of the energy produced by the Araucária TPP in the spot market, partially offset by the (a) recording of R$807.3 million in impairment of the generation segment assets, (b) the 63.4% increase in electricity purchased for resale, and (c) higher costs with natural gas and supplies for the gas business due to the Araucária Thermal Power Plant s dispatch. In 2014, COPEL s net income totaled R$1,335.6 million, 21.3% more than in For further details, please see item 2.6. Excluding non-recurring items, and considering the effects of the CVA s mutation in the Copel Distribuição s result, COPEL s adjusted net income stood at R$217.7 million in 4Q14, 41.9% down year on year In 2014, COPEL s adjusted net income would be 16.0% higher than 2013, totaling R$1,592.4 million. For further details on the adjusted net income, please see item 2.7. Recognition of Sectoral Financial Assets and Liabilities CVA Funds Non-recurring Effect Copel Distribuição recognized revenue of R$1,041.1 million in 4Q14, related to the net balance of sectoral financial assets and liabilities. As a result of (a) the execution of the Fourth Amendment to Copel Distribuição's Concession Agreement, with the inclusion of the guarantee that, if the concession is extinguished for any reason, the residual amounts of items of Portion A and other financial components that have not been recovered or returned via tariff shall be incorporated in the calculation of the indemnification or deducted from the indemnification of non-amortized assets, preserving the concessionaire s right or obligation to the Granting Authority in the realization of these assets and liabilities, and (b) CVM Resolution 732/2014, which approves Technical Guideline OCPC 08, making the recognition of certain sectoral financial assets or liabilities mandatory in the Statutory Financial Statements of Electricity Distributors, issued pursuant to International Financial Reporting Standards (IFRS) as of As a result, Copel Distribuição s net income totaled R$437.9 million. In 4Q14, net income stood at R$615.4 million. Please see item 4.2. Impairment In 2014, the Company tested its generation assets for impairment, mainly due to long rain shortage indicators and legal and environmental constraints. Hydroelectric power plants were strongly impacted by the prolonged drought, leading to a decline in the Company s energy supply, due to the significant water deficit percentage (GSF), while the Company s generation projects under construction were impacted by the temporary 3

4 interruption of the works, due to legal and environmental constraints and restrictions. As a result, in 4Q14, the Company recorded an impairment loss of R$807.3 million in its generation assets, R$678.5 million of which refers to the Colíder HPP and R$128.8 million to the other assets. Dividends The distribution of R$622.5 million in dividends and interest on own capital, representing a payout of 50%, will be proposed to the Annual Shareholders Meeting to be held on April 23, This total already includes the anticipation of R$380.8 million, R$350.8 million of which in dividends and R$30.0 in interest on own capital, on November 21, Extraordinary Tariff Revision On February 27, 2015, Aneel resolved on the Extraordinary Tariff Revision for electricity distributors. Copel Distribuição s average tariff increase approved by Aneel was 36.79% as of March 2, Of this total, 22.14% is related to Electric Energy Development Account - CDE funds and 14.65% to the repositioning of energy acquisition costs. The Extraordinary Tariff Revision was due to a series of events that significantly impacted the costs of energy concessionaires, which were not included in the 2014 tariff increase, led by the upturn (a) in CDE funds, (b) costs with energy purchases, due to the increase in Itaipu s tariff (46.14%), and (c) the high prices in recent auctions. Tariff Flags On January 1, 2015, the tariff flag system was introduced, pursuant to Aneel Resolution 547, of April 16, 2013, amended by Aneel Resolution 626, of September 30, In accordance with the model, the green, yellow and red flags indicate the country s generation conditions. In the first two months of 2015, the adopted model used a flag for each sub-market and the maximum established amount was R$30.00/MWh (red flag). On February 27, 2015, Aneel approved the system s improvement with the application of a single flat for the entire country (except for the States of Amazonas, Amapá and Roraima) and new amounts for each flag in order to reflect the real cost of generation conditions. The chart below shows the main changes adopted as of March 2, Flag Change January and February/2015 Tariff (R$/MWh) Change From March/2015 Tariff (R$/MWh) CMO¹ + ESS 2 < R$ 200,00/ MWh - CVU 3 < R$ 200,00/MWh - R$ 200/MWh < CMO + ESS R$ 200,00/MWh < CVU < R$ 388,48/MWh CMO + ESS > R$ 350,00/MWh CVU > R$ 388,48/MWh ¹ CMO: Marginal Cost of Operation. It is the change of the operating cost required to meet additional demand MWh, using existing resources. ² ESS: System Service Charges. ³ CVU: Variable Unit Cost. 4 Maximum Value of Difference Settlement Price (PLD). 4

5 Adjustment Auction On January 15, 2015, the 8th Adjustment Auction was held to complement the energy load needed to serve the distribution concessionaires consumer market. Copel Distribuição acquired 1,303.1 GWh (302 average MW) through six-month contracts, at R$385.87/MWh. Investment Program CAPEX In 2015, COPEL plans to invest R$2.5 billion, 60% of which in electricity generation and transmission works, including the construction of 17 wind farms and 13 transmission projects already in progress. In the Distribution segment, we plan to invest R$784.7 million in the execution of works to improve, modernize, expand and reinforce the electricity distribution system in Paraná. The amounts approved by COPEL s Board of Directors do not include any eventual acquisitions or new works that may be acquired at ANEEL auctions, or other investments to be made by the investees and subsidiaries. For further details, please refer to item 5. Acquisition of Wind Farms and Sale Energy at the A-5 Auction In November 2014, COPEL acquired 100% of the wind farm projects belonging to Rodrigo Pedroso Energia Ltda RPE Energia. The complex, formed by six wind farms with a total capacity of MW and assured energy of 54.8 average-mw, will be built in the municipality of São Bento do Norte, in Rio Grande do Norte State, and had all its energy sold in the 20th New Energy Auction (A-5), for R$136.97/MWh, through availability contracts with a 20-year supply term. For further details, please refer to item 8.1. New Board of Executive Officers In the 128th Board of Directors Meeting, held in December 23, 2014, the Company's new Board of Executive Officers was elected for the period between 2015 and The Executive Officers took office on January 1, Mr. Luiz Fernando Leone Vianna, the Company s new CEO holds bachelor's degrees in Business Administration and Electrical Engineering from the Federal University of Paraná (UFPR) and has a solid career in the Brazilian electrical sector. He began his career at COPEL, where he has held several positions, being the first CEO of Copel Geração S.A. and Chief Institutional Relations Officer at COPEL. He is the Vice-Chairman of the Advisory Board at Empresa de Pesquisa Energética EPE/Concepe, a Board member at Environmental Forum Electric Sector (FMASE) and recently held the position of Chairman of the Board of Directors at the Association of Independent Electricity Producers (APINE). On the same date, Mr. Luiz Eduardo da Veiga Sebastiani took office as Chief Financial and Investor Relations Officer. He holds a bachelor s degree in Economics from UFPR and a post-graduate degree in Economic Theory from the State University of Campinas (UNICAMP). Mr. Sebastiani was COPEL s Chief Financial, Investor 5

6 Relations and Shareholding Control Officer between February 2013 and March 2014 and recently held the position of Paraná State Treasury Secretary, in addition to being a member of COPEL's Board of Directors. The new Chief Institutional Relations Officer, Mr. Cristiano Hotz, graduated from the Pontifical Catholic University of Paraná (PUC - PR) and specialized in Constitutional Law at the Brazilian Academy of Constitutional Law (ABDConst). Mr. Hotz was the Chief of Staff of the Government Secretariat of the Curitiba Municipal Government and Special Advisor of the Finance Department of the same city. He has taught Electoral Law at Escola Superior de Advocacia (ESA OAB/PR) and was the Attorney General of the Municipality of Pontal do Paraná, and a member of the Commission of Electoral Law of the Brazilian Bar Association (OAB) in Paraná and the Special Judgment Chamber of the Ethics and Discipline Court of OAB in Paraná. Recently, he was an advisor to the Paraná State Governor. Civil engineer, Mr. Jonel Nazareno Iurk was re-elected to the position of Chief Business Development Officer, which he has held since October Mr. Iurk was an environmental sanitation coordinator in the Coordination of the Curitiba Metropolitan Region Comec, an operational development engineer and coordinator of rural sanitation and environmental studies at Companhia de Saneamento do Paraná Sanepar, and Superintendent of the Brazilian Institute of the Environment and Renewable Natural Resources Ibama in Paraná. He was also a Technical Officer at ECOBR Engenharia e Consultoria Ambiental, the Paraná State Secretary of Environment and Water Resources and COPEL s Officer of Environment and Corporate Citizenship. Mr. Marcos Domakoski was re-elected to the position of Chief Corporate Management Officer. He holds a bachelor s degree in Business Administration and is the Chairman of the Board of Directors of Copel Geração e Transmissão S.A. and a member of the Board of Directors of the Institute of Technology for Development Lactec. Mr. Domakoski was a professor at UFPR, a member of the Board of Directors at the Regional Bank for the Development of the Extreme South (BRDE), Chairman of the Paraná Trade Association, a member of the Board of Directors of the Brazilian Institute of Quality and Productivity IBQP and Chief Financial Officer at Cia. Melhoramentos de São Paulo - Indústria de Papel. He was also Chief Financial Officer at Santa Maria Cia. de Papel e Celulose and Vice-Chief Executive Officer at Rio Branco Cia. de Seguros. Variable Unit Cost (CVU)- Araucária TPP For operating without an availability agreement, the variable unit cost of Araucária TPP is calculated and established by Aneel in order to restore, in addition to fuel costs, operating costs and the return on assets. Through Order 210, of January 28, 2015, Aneel approved for UEGA, on a provisional basis, a CVU of (a) R$765.86/MWh from Februar, to May, 2015 and (b) R$595.11/MWh from June, 2015 to January, In 2014, the Araucária TPP s average CVU came to R$592.22/MWh. For further details, please refer to item

7 Compensation of Electricity Costs (Transfer of CDE funds and ACR Account) The Brazilian government issued decree 8203/2014, amending Decree 7945/2013 and permitting the transfer of CDE funds to cover costs arising from the involuntary exposure of distributors in January In April 2014, the Brazilian government issued Decree 8221/2014 creating the Regulated Market Account (ACR account) to cover the distributors' expenses arising from: (a) involuntary exposure to the spot market, and (b) the dispatch of thermal power plants linked to the CCEAR (regulated market) agreements under the availability model between February and December In 2014, the Company recorded the transfer of R$1,253.4 million, of which R$95.8 million were recorded in 4Q14. The amounts were recognized as compensation of electricity costs as detailed in Note 32.1 of our Standardized Financial Statements. Start-up - Integração Maranhense Transmissora de Energia On December 2, 2014, the Açailândia - Miranda II transmission line began operating in Maranhão State. This project belongs to Integração Maranhense Transmissora de Energia S.A. (Copel GeT 49% and Elecnor 51%). With Annual Permitted Revenue of R$31.0 million and total investments of R$360.0 million, the Açailândia- Miranda II transmission lines operates in extra high voltage (500kV) and is 365 km long. This new line increases energy supply reliability in Maranhão and increases the energy exchange limit between the North and Northeast regions. For further details, please refer to item 8.2. Start-up São Bento Energia Wind Farm Complex On February 26, 2015, the four wind farms (Boa Vista, Olho d Água, São Bento do Norte and Farol) that make up the São Bento Wind Farm Complex, in Rio Grande do Norte State, began operations. With an installed capacity of 94 MW and assured energy of 46.3 average-mw, the project is the first of a series of five complexes to be built by COPEL in the state by For further details, please refer to item 8.1. BM&FBovespa maintains COPEL in the Corporate Sustainability Index (ISE) in 2015 In 2015, COPEL remained in the select group of the 40 most sustainable companies in the São Paulo Stock Exchange (BM&FBovespa). COPEL has been present in nine of the ten editions of the index, which lists the shares of the companies that have demonstrated their commitment to sustainability (economic efficiency, environmental balance, social justice and corporate governance). Representing 19 sectors, the new portfolio includes 51 shares that total R$1.2 trillion in market cap, equivalent to 49.9% of the total value of the companies with shares traded on the BM&FBOVESPA, based on the closing prices on November 24,

8 HPP Colíder In view of the government s actions and fortuitous events or force majeure during the implementation of the project, the commercial start-up of Colíder Hydroelectric Power Plant is scheduled for April, Copel GeT is requesting the regulatory body to recognize an exclusion of liability for the delay in the power plant s start-up and has been fulfilling the Contract for Energy Trading in the Regulated Environment (CCEAR) since January 1, 2015, with energy from its own generation complex. More details in item 8.1. HPP Baixo Iguaçu COPEL owns a 30% interest in the Baixo Iguaçu Consortium, which is responsible for Baixo Iguaçu HPP construction and operation. The works are suspended since June 2014 due to judicial issues. More details in item

9 2. Financial Performance 2.1 Operating Revenues In 4Q14, operating revenues reached R$4,462.4 Net Operating Revenues million, 82.6% up on the R$2,444.0 million in the same period of 2013, led by: (i) the 43.2% increase in revenue from electricity sales to final customers, (which reflects only actual sales revenues, excluding the distribution grid tariff TUSD), chiefly due to: (a) Copel Distribuição s 24.86% tariff increase as of June 24, 2014, and (b) the 7.2% growth of Copel Distribuição s captive market over 4Q13; (ii) the 149.0% increase in electricity sales to distributors, mainly stemming from (a) the higher revenue in the spot market (CCEE) due to the sale of energy of the Araucária TPP in the spot market, (b) the high price of electricity (PLD) in the period; (iii) the 9.3% upturn in use of the main distribution and transmission grid item (TUSD and TUST revenue), due mainly, (a) the tariff increases applied by Copel Distribuição, (b) the growth of 5.3% in the grid market; (iv) the 15.8% reduction in construction revenue, as a result of the booking of investments in construction services and improvements to electricity distribution and transmission infrastructure; (v) the 11.7% upturn in revenues from telecommunication, following the expansion of the area of operations and the provision of services to new customers the customer base grew from 8,270 at the end of December 2013 to 21,761 to the end of December 2014; (vi) a 32.7% increase in piped gas distribution (supplied by Compagas), chiefly due to the tariff adjustment (7.0% in March 2014) and market growth, especially in the industrial segment; (vii) the R$1,033.9 million booked under result of sectoral financial assets and liabilities resulting from the recognition of the CVA balance pursuant CVM Resolution number 732/14; and (viii) the negative R$60.1 million in other operating revenues resulted from the reclassification in 4Q14 of R$67.3 million in connection with the revenue compensation due to insufficient energy generation, in accordance with ANEEL Order 4786/ % 16% 3% 1% 7% 1% 31% 31% Electricity sales to final customers Electricity sales to distributors Use of the main distribution and transmission grid Construction revenues Telecom revenues Distribution of piped gas Result of financial assets and liabilities sector Other operating revenues 9

10 R$ '000 Income Statement 4Q14 3Q14 4Q13 Var.% Var.% (1) (2) (3) (1/3) (4) (5) (4/5) Electricity sales to final customers 1,298,782 1,229, , ,371,153 3,344, Electricity sales to distributors 1,131, , , ,370,792 1,932, Use of the main distribution and transmission grid 588, , , ,237,470 2,028, Construction revenue 307, , ,793 (15.8) 1,279,010 1,076, Revenues from telecommunications 43,278 42,891 38, , , Distribution of piped gas 118,898 86,922 89, , , Result of sectoral financial assets and liabilities 1,033, ,033, Other operating revenues (60,054) 36,875 50,890-69, ,251 (75.9) Operating revenue 4,462,387 3,286,884 2,444, ,918,517 9,180, In 2014, COPEL's net revenue moved up by 51.6% year on year, from R$9,180.2 million in 2013 to R$13,918.5 million in 2014, chiefly due to (a) recognition of R$1,033.9 million of result of result sectoral financial assets and liabilities (CVA), (b) the sale of energy from the Araucária Thermal Power Plant, (c) the allocation of energy, by Copel GeT, in the spot market, (d) Copel Distribuição s 24.86% tariff increase applied in June 2014, and (e) the 3.5% expansion of COPEL s total market. 2.2 Operating Costs and Expenses In 4Q14, operating costs and expenses reached R$4,151.1 million, 72.9% up on the R$2,400.9 million recorded in 4Q13. The most important variations were: (i) the 63.4% increase in electricity purchased for resale due to higher costs in energy acquisition (a) in the spot market as a result of the increased PLD and the decrease in Copel GeT s assured energy (GSF), (b) in the regulated market owing to Operating Costs and Expenses 10% Electricity purchased for resale 5% 3% Material and other 41% Use of the main distribution and transmission grid Pension and healthcare plans 27% Third-party services 3% 10% Depreciation and amortization Construction cost inflation adjustments in contract prices and new energy purchase agreements (at auction A, held in April 2014, at which Copel Dis acquired 388 average-mw at R$268.33/MW), and (c) from Itaipu owing to the larger amount of energy purchased and the appreciation of the dollar. R$'000 4Q14 3Q14 4Q13 Var. % Var. % Electricity Purchased for Resale (1) (2) (3) (1/3) (4) (5) (4/5) Itaipu 209, , , , , CCEAR (Auction) 954, , , ,394,222 2,305, Bilateral 16,993 43,897 56,098 (69.7) 177, ,069 (18.4) CCEE 604, , , ,281, , (-) Transfer CDE - CCEE (95,819) (95,616) (29,883) (1,253,436) (294,085) Proinfa 45,832 46,356 41, , , (-) Pis / Pasep and Cofins (123,622) (115,023) (91,824) 34.6 (441,288) (333,427) 32.3 TOTAL 1,612,229 1,310, , ,097,719 3,336,

11 (ii) the positive R$41.0 million in charges for the use of the main transmission grid" resulted from the reducing effect of the R$232.7 million accounted for in connection with the refund to Reserve Energy users of the financial surplus of CONER (Reserve Energy Account), pursuant to ANEEL Order 4786/2014 and ANEEL Resolution 613/2014, partly offset by (a) new assets going into operation in the system and (b) by the adjustment in the charges for the use of the transmission system; Charges of the main distribution and transmission grid 4Q14 (1) System usage charges 151, , , , , Itaipu transportation charges 18,416 18,900 12, ,263 51, Charge reserve energy - EER ,554 16,672 (72.7) System Service Charges - ESS 18,870 17,337 22,709 (16.9) 71, ,864 - (-) Transfer CDE - ESS (319,624) - (-) Reserve energy account - Coner (232,706) (232,706) - - (-) PIS / Pasep and Cofins taxes on charges for use of power grid 2,868 (18,193) (13,015) - (42,414) (44,312) (4.3) TOTAL (41,015) 167, , , ,317 (5.5) 3Q14 (2) 4Q13 (3) Var. % (1/3) 2014 (4) 2013 (5) R$ '000 Var. % (4/5) (iii) personnel and management totaled R$381.2 million, 1.0% down year on year, reflecting: (a) the drop in provisions for severance pay related to the Voluntary Redundancy Program, and (b) the 0.6% lower provisions in workforce, partly offset by (a) an increase in profit sharing and (b) the 7.5% adjustment in wages and salaries, in force as of October 2014; (iv) the 32.8% upturn in pension and healthcare plans, which reflects the accrual of amounts calculated in accordance with CVM Resolution 695/2012, chiefly due to higher expenses on pension plans; (v) the materials and supplies for power electricity line includes costs with the acquisition of coal for the Figueira Thermal Power Plant and natural gas for the Araucária Thermal Power Plant, and considers the elimination between companies of the same group (Araucaria TPP buys gas from Compagas); (vi) the 463.2% upturn in natural gas and supplies for the gas business", as a result of the purchase of natural gas by Compagas to supply, especially, the Araucária Thermal Power Plant, which has been operated by UEGA, a company controlled by COPEL, since February 1, 2014; (vii) third-party services rose by 2.4% due to increased costs in (a) maintenance of the electrical system, (b) meter reading and bill deliveries, and (c) consulting and audit services, partly offset by the lower costs in (a) facility maintenance and (b) data communication, processing and transmission; (viii) provisions and reversals totaled R$927.8 million in the period owing to (a) the recognition of losses of about R$807.3 million related to the impairment of generation assets and (b) the R$117.2 million provision, mainly connected with labor claims; (ix) the 15.3% decrease in construction cost resulted from investments in power distribution and transmission in the period; and 11

12 (x) other costs and expenses climbed by 106.8%, chiefly due to higher expenses on taxes related to the State REFIS (Tax Debt Refinancing Program) and indemnifications. R$ '000 Operating Costs and Expenses 4Q14 3Q14 4Q13 Var.% Var.% (1) (2) (3) (1/3) (4) (5) (4/5) Electricity purchased for resale 1,612,229 1,310, , ,097,719 3,336, Charge of the main distribution and transmission grid (41,015) 167, , , ,317 (5.5) Personnel and management 381, , ,917 (1.0) 1,052,811 1,096,347 (4.0) Pension and healthcare plans 57,169 47,754 43, , , Materials and supplies 18,462 19,589 19,118 (3.4) 74,435 70, Materials and supplies for power eletricity 58,422 42,316 6, ,848 27, Natural gas and supplies for the gas business 409, ,280 72, ,469, , Third-party services 119, , , , , Depreciation and amortization 167, , , , , Provisions and reversals 927, ,911 50,831-1,203, , Construction cost 314, , ,995 (15.3) 1,285,902 1,088, Other cost and expenses 126,746 78,748 61, , , TOTAL 4,151,076 2,980,834 2,400, ,368,558 8,067, In 2014, operating costs and expenses came to R$12,368.6 million, 53.3% up on 2013, chiefly due to (a) the higher energy purchase costs due to the new agreements (CCEARs), Copel GeT s lower physical guarantee (GSF) and PLD in the period, (b) the acquisition of natural gas and inputs for the gas operation due to the dispatch from Araucária Thermal Power Plant and (c) the higher provisions and reversals reflecting mainly the recognition of R$807.3 million corresponding to the impairment of generation assets. 2.3 Equity in the Earnings of Subsidiaries Equity in the results of subsidiaries reflects gains and losses from investments in COPEL's investees. In 4Q14, equity in the earnings of subsidiaries totaled R$39.9 million, comprising gains from Dominó Holdings, SANEPAR, Dona Francisca Energética, Foz do Chopim Energética, and energy transmission SPCs. In 2014, equity in the earnings of subsidiaries came to R$160.0 million. 2.4 EBITDA Earnings before interest, taxes, depreciation and amortization amounted to R$518.7 million in 4Q14, 97.7% up from R$262.3 million in 4Q13. In 2014, EBITDA rose by 27.9% year on year to R$2,339.9 million. 2.5 Financial Result Financial income totaled R$195.5 million in 4Q14, an 11.3% rise year-over-year due to (a) the higher monetary gain on accounts receivable related to the concession and on CRC, and (b) higher income from financial investments, reflecting higher interest rates and inflation in the period. In 2014, financial income rose by 6.5% year-over-year to R$694.5 million. Financial expenses totaled R$184.6 million in 4Q14, 43.5% higher over 4Q13, chiefly due to the increase in debt 12

13 charges and monetary variance, reflecting higher interest rates and financing and debentures. In 2014, financial expenses rose by 47.0% year-over-year to R$546.8 million. Consequently, the Company recorded financial income of R$10.8 million in 4Q14, vs. a financial loss of R$47.0 million in 4Q13. In 2014, the Company s financial income came to R$147.7 million, down 47.3% compared to the previous year. R$'000 4Q14 3Q14 4Q13 Var% Var% (1) (2) (3) (1/3) (4) (5) (4/5) Financial Revenues 195, , , , , Income and monetary variation on CRC transfer 49,185 22,558 43, , ,348 (1.2) Monetary restatement on indemnifiable assets - concession 40,028 (14,389) 36, , ,259 (28.9) Monetary restatement on indemnified assets - extension of the concession 7,579 8,858 17,343 (56.3) 50,272 84,572 (40.6) Income from financial investments 53,366 67,123 41, , , Late fees on electricity bills 21,734 21,871 24,344 (10.7) 138, , Other financial revenues 23,579 9,575 13, ,136 38, Financial Expenses (184,645) (131,735) (128,669) 43.5 (546,806) (372,052) 47.0 Debt charges (110,523) (104,351) (70,073) 57.7 (366,686) (233,417) 57.1 Monetary variation - ANEEL Concession - Use of public asset (20,138) (8,517) (18,977) 6.1 (63,000) (68,096) (7.5) Pis/ Pasep and Cofins taxes over interest on equity (27,662) - (25,400) 8.9 (28,404) (26,352) 7.8 Monetary and exchange variation (2,483) (9,020) (4,874) (49.1) (29,092) (15,838) 83.7 Other financial expenses (23,839) (9,847) (9,279) (59,624) (28,349) Financial income (expenses) 10,826 (16,139) 47,024 (77.0) 147, ,311 (47.3) 2.6 Consolidated Net Income COPEL recorded net income of R$270.9 million in 4Q14, up 52.0% from R$178.2 million in 4Q13. In 2014, the Company s net income grew by 21.3% year on year to R$1,335.6 million. 2.7 Adjusted Consolidated Net Income Excluding non-recurring effects (a) the extraordinary record of result of sectoral financial assets and liabilities (CVA) at Copel Distribuição, and (b) of the losses related to the impairment at Copel GeT, and considering the effects of CVA s mutations at Copel Distribuição, COPEL s adjusted net income would be R$217.7 million in 4T14 and R$1,592.4 million in Adjusted EBITDA of COPEL would be R$445.4 in 4T14, 43.9% lower than the R$793.5 in the same period last year. Already in 2014 the EBITDA was 22.1% higher than the R$2,241.1 million in 2013 to R$2,736.2 million. R$ million Item Adjusted Consolidated Net Income Statement 4Q14 4Q13 Var. % Var. % (A) (-)Sectorial financial assets and liabilities result 1,041, ,041, (B) (+) CVA mutation in the period 153, ,655 (48.5) 622, , (C) (+)Impairment 807, , (D) = (A) + (B) + (C) (=) Gross non-recurring effect (80,534) 297, , ,704 (5.5) (E) = (D) x 34% (-) Income Tax (27,382) 101, , ,979 (5.5) (F) = (D)- (E) (=) Net non-recurring effect (53,152) 196, , ,725 (5.5) (G) Net Income 270, , ,335,615 1,101, (F) + (G) Adjusted Net Income 217, ,665 (41.9) 1,592,380 1,373, (H) EBITDA 518, , ,339,857 1,829, (H) + (D) EBITDA Ajustado 445, ,477 (43.9) 2,736,173 2,241,

14 2.8 Consolidated Income Statement R$'000 Income Statement 4Q14 3Q14 4Q13 Var.% Var.% (1) (2) (3) (1/3) (4) (5) (4/5) OPERATING REVENUES 4,462,387 3,286,884 2,444, ,918,517 9,180, Electricity sales to final customers 1,298,782 1,229, , ,371,153 3,344, Electricity sales to distributors 1,131, , , ,370,792 1,932, Use of the main distribution and transmission grid 588, , , ,237,470 2,028, Construction revenue 307, , ,793 (15.8) 1,279,010 1,076, Revenues from telecommunications 43,278 42,891 38, , , Distribution of piped gas 118,898 86,922 89, , , Result of Sectoral financial assets and liabilities 1,033, ,033, Other operating revenues (60,054) 36,875 50,890-69, ,251 (75.9) OPERATING COSTS AND EXPENSES (4,151,076) (2,980,834) (2,400,876) 72.9 (12,368,558) (8,067,627) 53.3 Electricity purchased for resale (1,612,229) (1,310,933) (986,633) 63.4 (5,097,719) (3,336,359) 52.8 Charge of the main distribution and transmission grid 41,015 (167,888) (125,453) - (384,846) (407,317) (5.5) Personnel and management (381,187) (223,186) (384,917) (1.0) (1,052,811) (1,096,347) (4.0) Pension and healthcare plans (57,169) (47,754) (43,055) 32.8 (201,542) (176,196) 14.4 Materials and supplies (18,462) (19,589) (19,118) (3.4) (74,435) (70,478) 5.6 Materials and supplies for power eletricity (58,422) (42,316) (6,859) (150,848) (27,187) Natural gas and supplies for the gas business (409,256) (359,280) (72,669) (1,469,842) (295,671) Third-party services (119,204) (104,756) (116,465) 2.4 (424,464) (423,459) 0.2 Depreciation and amortization (167,478) (154,303) (162,591) 3.0 (629,943) (603,203) 4.4 Provisions and reversals (927,769) (126,911) (50,831) - (1,203,682) (199,555) Construction cost (314,169) (345,170) (370,995) (15.3) (1,285,902) (1,088,275) 18.2 Other cost and expenses (126,746) (78,748) (61,290) (392,524) (343,580) 14.2 EQUITY IN EARNINGS OF SUBSIDIARIES 39,904 35,469 56,574 (29.5) 159, , PROFIT BEFORE FINANCIAL RESULTS AND TAXES 351, ,519 99, ,709,914 1,226, FINANCIAL RESULTS 10,826 (16,139) 47,090 (77.0) 147, ,311 (47.3) Financial income 195, , , , , Financial expenses (184,645) (131,735) (128,603) 43.6 (546,806) (372,052) 47.0 OPERATIONAL EXPENSES/ INCOME 362, , , ,857,631 1,506, INCOME TAX AND SOCIAL CONTRIBUTION ON PROFIT (91,178) (91,934) 31,383 - (522,016) (405,069) 28.9 Income tax and social contribution on profit (72,943) (126,155) 12,536 - (747,869) (554,520) 34.9 Deferred income tax and social contribution on profit (18,235) 34,221 18, , , NET INCOME (LOSS) 270, , , ,335,615 1,101, Attributed to controlling shareholders 237, , , ,205,950 1,072, Attributed to non-controlling interest 33,605 13,809 4, ,665 28, EBITDA 518, , , ,339,857 1,829,

15 3. Consolidated Balance Sheet The main accounts and changes in the Balance Sheet in relation to December 2013 are described below. Please refer to the Explanatory Notes to our Standardized Financial Statements for further information. 3.1 Assets On December 31, 2014, COPEL s assets totaled R$25,618.1 million, 10.8% up on December 31, Main asset accounts Cash, Cash Equivalents and Bonds and Securities On December 31, 2014, the cash, cash equivalents and bonds and securities of COPEL s wholly owned subsidiaries and controlled companies totaled R$1,331.5 million, 40.9% less than the R$2,251.4 million recorded in 2013, and were mostly invested in Bank Deposit Certificates (CDBs) and repo transactions. The investments earned an average yield of the period variation in the Interbank Deposit Certificate (CDI) rate. Customers In 2014, customers increased by 53.3% year-over-year to R$2,254.5 million, reflecting mainly the R$470.3 million recorded in connection with energy sale in the spot market of the Araucária Thermal Power Plant s dispatch. CRC Transferred to the State of Paraná Through the fourth addendum signed on January 21, 2005, the Company renegotiated the CRC balance on December 31, 2004 with the State of Paraná at R$1,197.4 million, in 244 monthly installments recalculated by the price amortization system, restated by the IGP-DI inflation index plus annual interest of 6.65%. The first installment was due on January 30, 2005, with subsequent and consecutive maturities until April The current CRC balance is R$1,344.1 million. The State of Paraná has been paying the renegotiated installments pursuant to the fourth addendum, whose amortizations are guaranteed by dividends. Sectoral Financial Assets As a result of (a) the execution of the Fourth Amendment to Copel Distribuição's Concession Agreement, with the inclusion of the guarantee that the residual amounts of items of Portion A and other financial components not recovered or returned via the tariff will be considered in, or discounted from, the indemnification for nonamortized assets at the expiration of the concession and (b) CVM Resolution 732/2014, which approves Technical Guideline OCPC 08 as of the year ended December 31, 2014, which makes the recognition of certain sectoral financial assets and/or liabilities mandatory in Electricity Distributors Statutory Financial 15

16 Statements, Copel Distribuição recorded sectoral financial assets of R$1,041.1 million, R$1,033.9 million of which recognized as operating revenue under result of sectoral financial assets and liabilities and R$7.2 million as a contra-entry to financial income. Please refer to our Standardized Financial Statements (Note 9) for further details. Accounts Receivable Related to the Concession Extension Following Copel Geração e Transmisão s acceptance of the conditions established by the government agency for the anticipation of the extension of the transmission assets (Provisional Measure 579), on November 1, 2012, through Ordinances 578 and 579 and Interministerial Ordinance 580, the Ministry of Mines and Energy announced the indemnification the Company is entitled to under Transmission Concession Agreement 060/2001, in the amount of R$893.9 million (considering only the assets that began operating after May 2000). On December 31, the amount recorded in this account totaled R$461.3 million, R$256.5 million lower than in December 2013, due to amortizations in the period. With the enactment of Law 12783, on January 11, 2013, the government agency reconsidered the right of indemnification for the assets existing on May 31, 2000 (RBSE), and Aneel Resolution 589, of December 13, 2013, established that the indemnification would be calculated based on the New Replacement Value (VNR), less the asset depreciation rate. COPEL is calculating the indemnification amount to present until March 31, 2015 to Aneel. Investments, Property, Plant and Equipment and Intangible Assets "Investments" moved up by 39.8% in 2014, due to period transfers and equity in the earnings of subsidiaries. Property, plant and equipment increased by 4.0%, due to new assets, in accordance with the Company's investment program, net of period depreciation. Intangible assets moved up by 6.8%, fuelled by the recognition of investments in new assets of Copel Distribuição, partially offset by amortizations related to Concession Agreement. 16

17 R$'000 Assets Dec/14 Sep/14 Dec/13 Var.% Var.% (1) (2) (3) (1/2) (1/3) CURRENT 5,218,176 5,409,291 4,680,284 (3.5) 11.5 Cash and cash equivalents 740,131 1,790,122 1,741,632 (58.7) (57.5) Bonds and securities 459, , ,222 (17.6) 18.0 Collaterals and escrow accounts 13,497 10,023 1, Customers 2,178,816 1,900,378 1,337, Dividends receivable 26,332 15,035 9, CRC transferred to the State of Paraná 94,579 90,773 85, Net sectoral financial assets 609, Account receivable related to concession 7,430 6,626 4, Accounts receivable related to the concession extension 301, , , (14.5) Other current receivables 415, , ,890 (4.6) 5.0 Inventories 150, , , Income tax and social contribution 105,074 34, , (21.1) Other current recoverable taxes 96, ,779 70,013 (13.9) 37.5 Prepaid expenses 20,133 21,464 19,982 (6.2) 0.8 NON-CURRENT 20,399,966 20,085,392 18,431, Long Term Assets 8,261,472 7,887,035 7,224, Bonds and securities 132, , ,536 (2.1) 9.7 Collaterals and escrow accounts 56,956 48,319 45, Customers 75,696 74, , (43.0) Net sectoral financial assets 1,249,529 1,247,170 1,295, (3.5) CRC transferred to the State of Paraná 736, , , Judicial deposits 431, Account receivable related to concession 4,417,987 4,076,184 3,484, Accounts receivable related to the concession extension 160, , ,645 - (56.2) Other non-current receivables 85,324 42,207 29, Income tax and social contribution 128, , ,659 (34.5) (34.9) Other non-current recoverable taxes 123, , ,498 (23.8) (0.8) Deferred income tax and social contribution 526, , ,413 (40.9) (30.2) Prepaid expenses (11.2) (56.1) Related parties 137, , Investments 1,660,150 1,632,079 1,187, Property, plant and equipment, net 8,304,188 8,379,565 7,983,632 (0.9) 4.0 Intangible assets 2,174,156 2,186,713 2,035,361 (0.6) 6.8 TOTAL 25,618,142 25,494,683 23,111,

18 3.2 Liabilities Main liability accounts Supplier In 2014, suppliers increased by 40.5% to R$1,604.8 million mainly due to (a) increased gas purchase by Compagas to cope with the consumption of Araucária Thermal Power Plant and (b) the energy purchase in the spot market owing to GSF and PLD in the period. Debt and Shareholders Equity COPEL s consolidated debt totaled R$6,054.4 million on December 31, 2014, representing 44.2% of its consolidated shareholders equity, which closed the period at R$13,682.8 million, equivalent to R$50.00 per share (book value per share). The breakdown of loans, financing and debentures is shown in the table below: R$'000 Short term Long term Total Foreign Currency National Treasury ,601 71,197 Total ,601 71,197 Eletrobras - COPEL 49,484 81, ,761 FINEP 5,737 27,431 33,168 Domestic Currency BNDES 71,945 1,454,196 1,526,141 Banco do Brasil S/A and other 739, ,819 1,707,683 Debentures 431,491 2,153,957 2,585,448 Total 1,298,521 4,684,680 5,983,201 TOTAL 1,299,117 4,755,281 6,054,398 Loans, financing and debentures maturities are presented below: R$'000 Short Term Long Term After2020 Total Domestic Currency 1,298,521 1,071,064 1,205, , , ,680 1,008,239 5,983,201 Foreign Currency ,601 71,197 TOTAL 1,299,117 1,071,064 1,205, , , ,680 1,078,840 6,054,398 At the end of December 2014, the Company had R$794.2 million in suretyships and guarantees, as shown below. 18

19 Guarantees and Endorsements¹ 2014 Dona Francisca 1,168 SPCs 793,028 Transmissora Sul Brasileira 52,344 Caiuá Transmissora 43,483 Integração Maranhense 72,021 Matrinchã Transmissora 271,102 Guaraciaba Transmissora 196,561 Costa Oeste 18,052 Mata de Santa Genebra 24,828 Paranaíba 86,859 Marumbi 27,778 TOTAL 794,196 ¹ Adjusted for Copel s stake. R$'000 COPEL s consolidated net debt (loans, financing and debentures less cash and cash equivalents) and the net debt/ebitda ratio are shown in the following chart: 5550,0 2, ,0 4722,942 2, ,0 1,500 R$ million 2550,0 1550, ,00,500 times 550,0 (450,0) 1193, , ,0 (215,392) (407,355) ,00 -,500 Net Debt Net Debt/ EBITDA Accounts Payables related to the Concession Use of Public Property It refers to the concession charges for the use of public property incurred since the execution of the project s concession agreement until the end of the concession. R$'000 Elejor Mauá Colíder Baixo Iguaçu SPP¹ Total Current liabilities 51, , ,955 Noncurrent liabilities 397,904 13,227 18,057 5,363 2, ,772 ¹Relative to SPP Cavernoso, Apucaraninha, Chopim I, Chaminé and Derivação Rio Jordão. 19

20 Provisions for Legal Claims The Company is involved in a series of lawsuits in different courts and instances. COPEL s management, based on its legal advisors opinion, maintains a provision for legal claims for those cases assessed as probable losses. The balances of provisions for legal claims are as follows: R$ '000 Probable Losses - Consolidated Dec/14 Sep/14 Dec/13 Var % Var % (1) (2) (3) (1/2) (1/3) Tax 291, , , Labor suits 326, , , Employees and Benefits 114,543 99,899 94, Civil 755, , , Suppliers 60,680 62,033 64,775 (2.2) (6.3) Civil and administrative claims 256, , , Easements 25,407 19,629 10, Condemnations and property 402, , , Customers 10,602 10,442 9, Environmental claims Regulatory 58,443 52,435 51, TOTAL 1,546,632 1,446,942 1,266, The cases classified as possible losses, as estimated by the Company and its controlled companies at the end of 2014, totaled R$2,739.6 million, 5.1% lower on December 2013, distributed in lawsuits of the following natures: tax - R$1,356.2 million; civil - R$698.6 million; labor - R$559.2 million; employee benefits - R$107.1 million; and regulatory - R$18.5 million. 20

21 R$'000 Liabilities Dec/14 Sep/14 Dec/13 Var.% Var.% (1) (2) (3) (1/2) (1/3) CURRENT 4,055,393 3,837,284 3,347, Payroll, social charges and accruals 252, , , Suppliers 1,587,205 1,335,890 1,092, Income tax and social contribution payable 309, , ,620 (15.9) 4.1 Other taxes due 137, , ,731 (47.9) (54.3) Loans, financing and debentures 1,299,117 1,255,555 1,014, Minimum compulsory dividend payable 19,691 4,580 18, Post employment benefits 37,404 30,918 29, Customer charges due 23,233 23,986 37,994 (3.1) (38.9) Research and development and energy efficiency 175, , , Accounts Payable related to concession - Use of Public Property 54,955 52,936 51, Other accounts payable 157, , ,011 (2.9) 15.3 NON-CURRENT 7,879,969 7,904,051 6,834,808 (0.3) 15.3 Suppliers 17,625 32,925 50,121 (46.5) (64.8) Other taxes due 87,129 81,567 68, Deferred income tax and social contribution 15, , ,501 (95.1) (96.4) Loans, financing and debentures 4,755,281 4,396,427 3,517, Post employment benefits 861, , ,249 (13.0) (8.1) Research and development and energy efficiency 159, , ,721 (26.8) 3.3 Accounts Payable related to concession - Use of Public Property 436, , , Other accounts payable Tax, social security, labor and civil provisions 1,546,632 1,446,942 1,266, EQUITY 13,682,780 13,753,348 12,928,752 (0.5) 5.8 Attributed to controlling shareholders 13,330,689 13,380,580 12,651,339 (0.4) 5.4 Share capital 6,910,000 6,910,000 6,910, Equity valuation adjustments 976, , , (0.6) Legal reserves 685, , , Retained earnings 4,516,825 3,897,833 3,897, Additional proposed dividends 241, , Accrued earnings - 1,043, Attributable to non-controlling interest 352, , ,413 (5.5) 26.9 TOTAL 25,618,142 25,494,683 23,111, Performance of the Main Companies 4.1 Copel Geração e Transmissão In 4Q14, Copel GeT s operating revenues totaled R$654.2 million, 6.5% down on the R$699.5 million recorded in 4Q13, mainly fueled by the (a) 8.2% decline in revenue from electricity sales to distributors due to the drop in energy sold through CCEARs and (b) a 49.3% fall in construction revenue due to the new assets going into operation, partly offset by a 35.8% rise in revenue from the use of the main transmission grid, connected with the adjustment in the Annual Permitted Revenue from transmission assets and the new assets going into 21

22 operations, in addition to the 12.8% upturn in revenue from electricity sales due to the price adjustments in free consumers contracts in force. Operating costs and expenses increased by 221.9% in 4Q14 over 4Q13, influenced by (a) the recognition of impairment losses of R$807.3 million primarily due to the impact of the delay in the construction of the Colider HPP by reason of legal environmental constraints and restrictions and (b) the R$192.1 million booked as costs in eletricity purchased for resale, chiefly, due to the lower GSF in the period and the increase PLD, partly offset by the 13.8% decline in personnel and management costs. Equity in the earnings of subsidiaries amounted to R$110.6 million in 4Q14, chiefly due to Copel GeT s interest in UEGA (60%), an amount that is eliminated in the consolidated income statement because they are companies belonging to the same group. In 4Q14, Copel GeT recorded a loss of R$304.4 million, and negative EBITDA of R$608.5 million. In 2014, Copel GeT s operating revenue increased by 8.4% to R$2,948.7 million whereas operating costs and expenses climbed by 81.8% to R$2,728.7 million in the same period. Net income totaled R$682.4 million whereas EBITDA came to R$866.5 million, down by 31.8% and 44.0% respectively from Main Indicators 4Q14 (1) 3Q14 (2) Net Operating Revenue (R$ million) (6.5) 2, , Operating Income (R$ million) (665.3) ,363.0 (48.6) Net profit (R$ million) (304.4) ,000.9 (31.8) EBITDA (R$ million) (608.5) ,546.8 (44.0) Operating Margin % 39.2% % 50.1% (52.6) Net Margin % 38.2% % 36.8% (37.1) EBITDA Margin % 47.2% % 56.9% (48.3) Investment Program (R$ million) Q13 (3) Var. % (1/3) 2014 (4) 2013 (5) Var. % (4/5) Excluding the non-recurring effect of the impairment losses, net income would have amounted to R$228.4 million and EBITDA to R$198.8 respectively in 4Q14. In 2014, net income would have come to R$1,215.2 and EBITDA to R$1, R$ million Item Adjusted Net Income Statement - Copel GeT 4Q14 4Q13 Var. % Var. % (A) (+)Impairment 807, , (B) (=) Gross non-recurring effect 807, , (C) = (B) x 34% (-) Income Tax 274, , (D) = (B) -(C) (=) Net non-recurring effect 532, , (E) Net Income (304,418) 267, ,386 1,000, (D) + (E) Adjusted Net Income 228, ,199 (14.5) 1,215,191 1,000, (F) EBITDA (608,524) 330,426 (284.2) 866,508 1,546,762 (44.0) (F) + (B) Adjusted EBITDA 198, ,426 (39.8) 1,673,789 1,546,

23 4.2 Copel Distribuição In 4Q14, Copel Distribuição s net operating revenues came to R$3,019.6 million, 84.3% higher than the R$1,638.3 million recorded in 4Q13, chiefly due to (a) the R$1,041.1 million recognized under result of sectoral financial assets and liabilities (CVA), (b) the 24.86% tariff increase as of June 24, 2014, (c) the 7.2% growth in the captive market in the period, and (d) revenue from the sale of 86,589 MWh in the spot market. Operating costs and expenses climbed by 12.9% year-over-year, totaling R$2,107.6 million, chiefly due to the 40.4% upturn in costs with eletricity purchased for resale. In 4Q14, Copel Distribuição recorded a profit of R$615.4 million and EBITDA of R$968.7 million. In 2014, net operating revenue amounted to R$8,347.0 million, up 40.0% year-over-year. In turn, operating costs and expenses totaled R$7,757.8 million, 23.0% higher than in the same period last year. Consequently, the Company recorded net income of R$437.9 million and EBITDA of R$810.7 million. Main Indicators 4Q14 (1) Net Operating Revenue (R$ million) 3, , , , , Operating Income (R$ million) (181.4) (114.3) - Net profit (R$ million) (121.1) (78.5) - EBITDA (R$ million) (175.5) (138.1) - Operating Margin 31.0% 3.8% -11.1% - 8.0% -1.9% - Net Margin 20.4% 2.5% -7.4% - 5.2% -1.3% - EBITDA Margin 32.1% 7.6% -10.7% - 9.7% -2.3% - Investment Program (R$ million) (69.3) Q14 (2) 4Q13 (3) Var. % (1/3) 2014 (4) 2013 (5) Var. % (4/5) If the sectoral assets and liabilities result had not been recognized, Copel Distribuição would have recorded a net income of R$29.5 million in 4Q14, ( R$75.3 million in 4Q13). In 2014, Copel Distribuição would have had a net income of R$161.8 million, compared to negative R$52.0 in Item Adjusted Net Income Statement - Copel Dis 4Q14 4Q13 Var. % Var. % (A) (-) Result of sectorial financial assets and liabilities 1,041, ,041, (B) (+) CVA mutation in the period 153, ,655 (48.5) 622, , (D) = (A) + (B) + (C) (=) Gross non-recurring effect (887,815) 297,655 - (418,243) 411,704 - (E) = (D) x 34% (-) Income Tax (301,857) 101,203 - (142,203) 139,979 - (F) = (D)- (E) (=) Net non-recurring effect (585,958) 196, , ,725 - (G) Net Income 615,426 (121,147) ,864 (78,509) 21.3 (F) + (G) Adjusted Net Income 29,468 75,306 (60.9) 161, ,216 (16.2) (H) EBITDA 968,650 (175,480) - 810,661 (138,112) - R$ million (H) + (D) EBITDA Ajustado 88, ,175 (27.9) 399, , Copel Telecomunicações Copel Telecomunicações operating revenues totaled R$61.5 million in 4Q14, 27.7% higher than the R$48.1 million recorded in 4Q13, chiefly due the expansion of the operating area and the services provided for new 23

24 customers. Operating costs and expenses grew by 24.8%, influenced by (a) the 37.3% increase in personnel and management expenses due to the Company s restructuring, with COPEL s IT department becoming part of Copel Telecom s staff, and (b) the 23.0% increase in third-party services, partly offset by the 73.3% drop in provisions and reversals. Net income totaled R$15.6 million in 4Q14, up 27.4% year-over-year. EBITDA stood at R$20.7 million, 26.3% higher than the R$16.4 million recorded in 4Q13. In 2014, Copel Telecomunicações operating revenue came to R$213.2 million, 13.5% higher than the R$187.8 million recorded in 2013 while operating costs and expenses rose by 8.0%.Net income totaled R$58.6 million in the period, 22.7% up on 2013, and EBITDA climbed by 17.6% to R$104.0 million. Main Indicators 4Q14 (1) 3Q14 (2) Net Operating Revenue (R$ million) Operating Income (R$ million) Net profit (R$ million) EBITDA (R$ million) Operating Margin 22.3% 42.1% 21.1% % 33.9% 9.0 Net Margin 25.4% 27.9% 25.4% (0.3) 27.5% 25.4% 8.1 EBITDA Margin 33.7% 53.9% 34.0% (1.1) 48.8% 47.1% 3.6 Investment Program (R$ million) Q13 (3) Var.% (1/3) 2014 (4) 2013 (5) Var. % (4/5) 4.4 UEG Araucária UEGA, a subsidiary of COPEL, has been responsible for the operation of the Araucária Thermal Power Plant since February 1, COPEL owns 80% of UEGA s capital (60% Copel GeT, 20% COPEL and 20% PETROBRAS). The plant had been previously leased to PETROBRAS, and COPEL used to receive a fixed amount for the lease. In 4Q14, UEGA recorded net revenue of R$625.9 million, net income of R$154.7 million and EBITDA of R$218.6 million. In 2014, UEGA recorded net revenue of R$2,134.8 million, EBITDA of R$655.1 million and net income of R$471.6 million. Main Indicators 4Q14 3Q14 2Q14 1Q Net Operating Revenue (R$ million) ,134.8 Operating Income (R$ million) Net profit (R$ million) EBITDA (R$ million) Operating Margin 35.9% 22.1% 28.2% 33.9% 30.4% Net Margin 24.7% 15.5% 19.6% 28.1% 22.1% EBITDA Margin 34.9% 22.0% 29.4% 35.1% 30.7% These results were due to the power plant s dispatch throughout the period and the sharp rise in energy price in the spot market (PLD). The Araucária TPP does not have an availability agreement and operates under the merchant model. COPEL consolidates the whole of UEGA s net income/(loss) so that PETROBRAS portion is booked under net income/(loss) attributable to non-controlling shareholders. More details in the Exhibit III. 24

25 5. Investment Program COPEL s investments in 2014 and the investment forecast for 2014 are presented below: R$ million Carried out Carried out Scheduled 4Q Generation and Transmission ,309.0 HPP Colider HPP Baixo Iguaçu TL Araraquara / Taubaté Cerquilho Substation TL Figueira-Londrina / Foz do Chopim-Salto Osório Paraguaçu Paulista Substation Curitiba Norte Substation Other Distribution Telecommunications Participation in new businesses ¹ TOTAL , ,616.7 ¹ Wind Energy Plants, Voltalia, Costa Oeste Transmissora, Marumbi Transmissora, Transmissora Sul Brasileira, Caiuá Transmissora, Integração Maranhense Transmissora, Matrinchã Transmissora de Energia, Guaraciaba Transmissora de Energia, Paranaíba Transmissora and Mata de Santa Genebra. For the year 2015, the investment program of COPEL provides the amount of R $ 2,476.9 million, as detailed below: R$ million Subsidiary / SPC Scheduled 2015 Copel Geração e Transmissão 1,300.1 HPP Colíder HPP Baixo Iguaçu TL Araraquara / Taubaté TL Figueira-Londrina / Foz do Chopim-Salto Osório 10.5 SE Paraguaçu Paulista 40.2 TL Bateias - Curitiba Norte 42.0 TL Foz do Chopim - Realeza 17.5 TL Assis - Londrina 19.7 SPC Matrinchã Transmissora de Energia ¹ SPC Guaraciaba Transmissora de Energia ¹ 96.9 SPC Mata de Santa Genebra Transmissão ¹ 10.8 SPC Cantareira Transmissora de Energia ¹ 45.3 Other Copel Distribuição Copel Telecomunicações Holding 5.5 Cutia Wind Farm Complex 90.0 Bento Miguel Wind Farm Complex 50.0 São Miguel do Gostoso Wind Farm Complex ¹ 22.6 Other Invesment ² TOTAL 2,476.9 ¹ Referring to COPEL's stake. ² Including the gas blocks and other wind farms in final stages of construction. 25

26 6. Power Market and Tariffs 6.1 Captive Market Copel Distribuição Electricity sales to Copel Distribuição s captive market came to 24,208 GWh in 2014, up 5.6% in comparison with 2013, mainly due to the increase in average consumption and in the customer base in the period. The table below breaks down electricity sales by customer segment: Number of Customers Energy sold (GWh) Dec/14 Dec/13 Var. % 4Q14 4Q13 Var. % Var. % Residential 3,437,030 3,320, ,842 1, ,267 6, Industrial 91,068 93,491 (2.6) 1,801 1, ,838 6, Commercial 369, , ,440 1, ,470 5, Rural 372, ,835 (0.1) ,252 2, Other 57,203 56, ,381 2, Captive Market 4,326,970 4,181, ,276 5, ,208 22, The residential segment consumed 7,267 GWh in 2014, 5.5% up, due to the increase in the customer base and the upturn in average consumption in the period, due to the maintenance of the favorable income conditions and employment level and temperatures above average in the period. At the end of December 2014 this segment accounted for 30.0% of captive market, totaling 3,437,030 residential customers. The industrial segment consumed 6,838 GWh in the period, 3.5% up, due the growth in industrial production of the beverage, wood products and paper & pulp sectors. At the end of the period, this segment accounted for 28.2% of captive market, with the company supplying power to 91,068 industrial customers. The commercial segment consumed 5,470 GWh between January and December 2014, 7.8% up on the same period of 2013, as a result of the increase in the customer base and higher temperatures in the period. At the end of December, this segment represented 22.6% of COPEL s captive market, with the company supplying power to 369,205 customers. The rural segment consumed 2,252 GWh, growing by 8.2%, mainly due to the strong performance of agribusiness in Paraná. At the end of December, this segment represented 9.3% of COPEL s captive market, with the company supplying power to 372,464 rural customers. Other segments (public agencies, public lighting, public services and own consumption) consumed 2,381 GWh, 4.5% up in the period. These segments jointly account for 9.9% of COPEL s captive market, totaling 57,203 customers at the end of the period. 26

27 6.2 Grid Market (TUSD) Copel Distribuição s grid market, comprising the captive market, concessionaires and licensees in the State of Paraná, and all free constumers within the Company s concession area, grew by 5.0% in 2014, as shown in the following table: Number of Customers / Agreements Dec/14 Dec/13 Var. % 4Q14 4Q13 Var. % Var. % Captive Market 4,326,970 4,181, ,276 5, ,208 22, Concessionaries and Licensees Free Customers ¹ ,121 1,180 (5.0) 4,483 4, Grid Market 4,327,106 4,181, ,587 7, ,429 28, ¹ All free customers served by Copel GeT and other suppliers at the Copel DIS concession area. Energy Sold (GWh) 6.3 Electricity Sales COPEL s electricity sales to final customers, that comprising Copel Distribuição s sales in the captive market and Copel Geração e Transmissão s sales in the free market, increased by 4.5% in The table below breaks down electricity sales by customer segment: Energy Sold (GWh) Segment Market 4Q14 4Q13 Var. % Var. % Residential 1,842 1, ,267 6, Total 2,794 2, ,841 10, Industrial Captive 1,801 1, ,837 6, Free 993 1,022 (2.8) 4,004 4,070 (1.6) Total 1,443 1, ,482 5, Commercial Captive 1,440 1, ,470 5, Free Rural ,252 2, Other ,382 2, Energy Supply 7,273 6, ,224 27, Total Energy Sold COPEL s electricity sales, comprising Copel Distribuição and Copel Geração e Transmissão s sales in all the markets, reached 43,556 GWh in 2014, a 3.5% growth over the same period of The following table shows COPEL s total electricity sales broken down between Copel Distribuição and Copel Geração e Transmissão: 27

28 Copel DIS Number of Customers / Agreements Energy Sold (GWh) Dec/14 Dec/13 Var. % 4Q14 4Q13 Var. % Var. % Captive Market 4,326,970 4,181, ,276 5, ,208 22, Concessionaries and Licensees CCEE (MCP) Total Copel DIS 4,326,974 4,181, ,540 6, ,269 23, Copel GeT CCEAR (Copel DIS) (43.8) (50.5) CCEAR (other concessionaries) ,199 1,650 (27.4) 4,695 6,389 (26.5) Free Customers ,025 (2.8) 4,016 4,082 (1.6) Bilateral Agreements ¹ ,858 1, ,392 5, CCEE (MCP) ² ,773 1,867 (5.0) Total Copel GeT ,440 4, ,287 18,477 (1.0) - - Total Copel Consolidated 4,327,074 4,181, ,980 10, ,556 42, Note: Not considering the energy from MRE (Energy Relocation Mechanism). CCEE: Electric Power Trade Chamber. CCEAR: Energy Purchase Agreements in the Regulated Market. MCP: Short Term Market. ¹ Includes Short Term Sales Agreements. ² Assured Power allocated in the period, does not consider the impact of the GSF. Additionally, the electricity produced by TPP Araucária was sold in the short-term market (MCP), totaling 3,308 GWh in the period. The amount of energy produced in 2014 is shown in the table below: TPP Araucária - UEGA 4Q14 3Q14 2Q14 Feb-Mar/14 ¹ 2014 GWh Own Generation ,308 Font: ONS ¹ Since February 1, 2014, the Araucária TPP became operated by UEGA, a COPEL subsidiary, which retains 80% of its capital (the remaining 20% is held by PETROBRAS). 28

29 6.5 Energy Flow Energy Flow Copel Dis GWh Energy Flow - Copel Dis Var. % Itaipu 5,870 5, CCEAR Copel Geração e Transmissão (50.6) CCEAR Other 16,281 14, CCEE (MCP) 1,573 1, Angra 1,046 1,050 (0.3) CCGF 1,315 1, Itiquira (50.4) Proinfa Elejor S.A 1,186 1,186 - Available Power 28,733 26, Captive market 24,208 22, Wholesale¹ CCEE (MCP) Losses and differences 3,464 3, Basic network losses Distribution losses 2,598 2, CG contract allocation ¹ Not including the 46 GWh consumed by the Concessionaire CFLO in February and March/2013, for it was not supplied by Copel Distribuição. Energy Flow Copel GeT GWh Energy Flow - Copel GeT Var. % Own Generation 24,605 24, CCEE (MCP) MRE - 1,587 - Dona Francisca Total Available Power 25,217 26,925 (6.3) Bilateral Agreements 7,392 5, CCEAR COPEL Distribuição (50.6) CCEAR Other 4,695 6,389 (26.5) Free Customers 4,016 4,082 (1.6) CCEE (MCP) 1,773 1,942 (8.7) MRE 6,197 7,855 (21.1) Losses and differences

30 Consolidated Energy Flow (Jan/ Dec 2014) Own Generation Captive Market 24, % 24, % GWh Concessionaires % Free Customers Total Available Power 4, % Purchased energy 53,950 Supplied Energy 29, % 20, % CCEAR: 16,692 Itaipu: 5,870 Itiquira: 452 Dona Francisca: 612 CCEE (MCP): 1,573 Angra: 1,046 Bilateral Agreements: CCEAR: CCEE (MCP): MRE: Losses and Differences 7,392 5,105 2,135 6,197 CCGF: 1,315 4, % MRE: 0 Elejor: 1,186 Proinfa: 599 Basic network losses: Distribution losses: CG Contracts: 1,278 2, CCEAR: Energy Purchase Agreements in the Regulated Market. MRE: Energy Reallocation Mechanism. CCEE (MCP): Electric Power Trade Chamber (Short-term market). CG: Center of gravity of the Submarket (difference between billed and energy received from CG). Don't consider the energy produced by TPP Araucária which was sold in the short-term market (MCP). GWh Consolidated Energy Flow Var.% Own Generation 24,605 24, Purchased energy 29,345 29,394 (0.2) Itaipu 5,870 5, Auction CCEAR 16,692 15, Itiquira (50.4) Dona Francisca CCEE (MCP) 1,573 1, Angra 1,046 1,050 (0.4) CCGF 1,315 1, MRE - 1,587 - Proinfa Elejor 1,186 1,186 - Total Available Power 53,950 53, Captive Market 24,208 22, Concessionaires¹ Free Customers 4,016 4,082 (1.6) Bilateral Agreements 7,392 5, Auction CCEAR 5,105 7,221 (29.3) CCEE (MCP) 2,135 1, MRE 6,197 7,855 (21.1) Losses and Differences 4,198 3, Basic network losses 1,278 1, Distribution losses 2,598 2, CG contract allocation ¹ Not including the 46 GWh consumed by the Concessionaire CFLO in February and March/2013, for it was not supplied by Copel Distribuição. Amounts subject to changes after settlement by CCEE. CCEAR: Energy Purchase Agreements in the Regulated Market. MRE: Energy Reallocation Mechanism. CCEE (MCP): Electric Power Trade Chamber (Short-term market). CG: Center of gravity of the Submarket (difference between billed and energy received from CG). Don't consider the energy produced by TPP Araucária which was sold in the short-term market (MCP). 30

31 6.6 Tariffs Power Purchase Average Tariff Copel Distribuição Amount Dec/14 Sep/14 Dec/13 Var. % Var. % Average MW (1) (2) (3) (1/2) (1/3) Itaipu Auction CCEAR Auction CCEAR Auction CCEAR 2010 H Auction CCEAR 2010 T Auction CCEAR 2011 H Auction CCEAR 2011 T Auction CCEAR 2012 T Auction CCEAR ³ (10.1) - Auction CCEAR Auction M Auction M Auction M Angra (2.9) 10.0 CCGF (3.2) 1.0 Santo Antônio Jirau Others Auctions Bilaterals Total / Tariff Average Supply 7 2, Furnas transport charge not included. ³ Energy Agreements. 4 Capacity Agreements. Tariff 2 Average auction price restated according to the IPCA inflation index. The price comprises in fact three components: a fixed component, a variable component, and expenses at the Electric Energy Trading Chamber (CCEE). The cost of the latter two components is dependent upon the dispatch of facilities according to the schedule set by the National System Operator (ONS). 5 Contract of quotas of assured power of those HPPs which concessions were extended pursuant the new rules of Law 12783/13. 6 Products average price. 7 Considers the amount of 812 average MW relative Auction is considered in the average price of December/2013 (R$ ). R$ / MWh Sales to Distributors Average Tariff Copel Geração e Transmissão R$ / MWh Amount Dec/14 Sep/14 Dec/13 Var. % Var. % Average MW (1) (2) (3) (1/2) (1/3) Copel Geração e Transmissão Auction CCEAR Auction CCEAR Auction CCEAR Auction CCEAR ( HPP Mauá) Auction CCEAR (Cavernoso II) Auction CCEAR 2014 (12 months) Copel Distribuição Tariff Concession holders in the State of Paraná Total / Tariff Weighted Average Supply¹ ¹ The 329 MW average related to the Auction is considered in the average price of December/

32 Sales to Final Customers Average Tariff Copel Distribuição without ICMS R$ / MWh Tariff Dec/14 (1) Sep/14 (2) Dec/13 (3) Var % (1/2) Var % (1/3) Industrial ¹ Residential (0.4) 23.9 Commercial Rural (1.7) 24.4 Other (0.7) 24.1 Retail distribution average rate (0.4) 24.8 ¹ Free customers not included. 7. Capital Market 7.1 Capital Stock COPEL s capital amounts to R$6,910 million, represented by shares with no par value. The Company's current number of shareholders is 25,015. In December 2014 the Company s capital was as follows: Thousand shares Shareholders Common % Preferred "A" % Preferred "B" % TOTAL % State of Paraná 85, , BNDESPAR 38, , , Eletrobras 1, , Free Floating 19, , , BM&FBovespa 19, , , NYSE , , LATIBEX Other TOTAL 145, , , % Common 59% Preferred 00% 14% 01% 26% State of Paraná BNDESPAR Eletrobras Free Floating Other 78,6% 21% BNDESPAR Free Floating Other Total 00% 44% 31% State of Paraná BNDESPAR Eletrobras Free Floating Other 01% 24% 32

33 7.2 Stock Performance From January through December 2014, COPEL s common shares (ON - CPLE3) and class B preferred shares (PNB -CPLE6) were traded in 100% of the trading sessions of the São Paulo Stock Exchange (BM&FBovespa). The free float accounted for 45.0% of the Company s capital. COPEL s market capitalization, based on the stock prices on all markets at the end of December 2014, was R$8,184.3 million. Out of the 70 stocks that make up the Ibovespa index, COPEL s class B preferred shares accounted for 0.4% of the portfolio, with a Beta index of 0.7. COPEL also accounted for 7.1% of the BM&Fbovespa s Electric Power Index (IEE).In the Corporate Sustainability Index (ISE), COPEL PNB accounted for 1.1% and COPEL ON 0.2%. On the BM&FBovespa, COPEL s common and class B preferred shares closed the period at R$24.90 (11.7% up) and R$35.90 (17.6% up), respectively. In the same period the Ibovespa had negative change of 2.9%. On the New York Stock Exchange (NYSE), class B preferred shares, represented by American Depositary Shares (ADSs), were traded at Level 3, under the ticker ELP, in 100% of the trading sessions and closed the period at US$13.17, 0.2% up. Over this period, the Dow Jones Index positive by 7.5%. On the Latibex (the Euro market for Latin American securities on the Madrid Stock Exchange), COPEL s class B preferred shares were traded under the ticker XCOP in 98% of the trading sessions and closed the period at 11.13, 17.2% up. In the same period the LATIBEX All Shares index had negative growth of 15.8%. The table below summarizes COPEL s share prices in 2014: Stock Performance (Jan - Dez/ 14) BM&FBovespa NYSE LATIBEX Common (CPLE3 / ELPVY) Preferred "B" (CPLE6 / ELP / XCOP) Total Daily average Total Daily average Number of Trades 54, ,972 3,363 Volume Traded 20,569,200 82, ,651, ,496 Trading Value (R$ thousand) 460,880 1,858 4,943,379 19,933 Presence in Trading Sessions % % Volume Traded 610,694 4, ,930, ,994 Trading Value (US$ thousand) 6, ,060,571 8,177 Presence in Trading Sessions % % Volume Traded ,065 1,520 Trading Value (Euro thousand) - - 3, Presence in Trading Sessions % 33

34 7.3 Dividends and Interest on Own Capital The table below presents the payments of dividends and interest on own capital as of 2010: Common Preferred "A" Preferred "B" Total , IOC¹ /17/10 09/20/10 85, Dividends /28/11 05/23/11 81, IOC /28/11 05/23/11 115, Total , IOC¹ /11/11 09/15/11 225, IOC /26/12 05/29/12 195, Total , IOC¹ /19/12 01/15/13 138, Dividends /25/13 05/23/13 130, Total , IOC¹ /13/13 12/16/13 180, Dividends¹ /13/13 12/16/13 145, Dividends /24/14 05/28/14 235, Total , IOC¹ /24/14 11/21/14 30, Dividends¹ /24/14 11/21/14 350, Dividends² , ¹ In advance. ² Proposed Type of Earning Fiscal Year Approved on Paid on Thousands of R$ (gross) R$ per Share 34

35 8. Operating Performance 8.1 Generation In Operation Copel Geração e Transmissão The chart below presents the main information on Copel GeT's power plants and the electricity they produced between January and December 2014: Power Plants Installed Capacity (MW) Assured Power (Average MW) Generation (GWh) Concession Expires Hydroelectric Power Plants 4, , ,535.7 Gov. Bento Munhoz da Rocha Netto (Foz do Areia) 1, , Gov. Ney Aminthas de B. Braga (Segredo) 1, , Gov. José Richa (Salto Caxias) 1, , Gov. Pedro V. Parigot de Souza (Capivari-Cachoeira) , Mauá (1) , Guaricana (2) Cavernoso II Chaminé Apucaraninha Mourão Derivação do Rio Jordão Marumbi (3) São Jorge Chopim I Rio dos Patos (4) (5) Cavernoso Melissa (6) Salto do Vau (6) Pitangui (6) Thermal Power Plant Figueira Wind Energy Plants Eólica de Palmas (7) TOTAL 4, , ,604.9 (1) Refered to COPEL's participation (51% of power plant capacity of 363 MW). (2) In process of upgrading. (3) Submitted to ANEEL for ratification. (4) Assured Power (Average MW) and Generation (GWh) until , date of concession expires. (5) The concession expired on February 14, However, the Company will be responsable for the operation and maintenance until the winner of the bidding process assume the plant. Until then, Copel will receive a pre established tariff to operate the plant, as defined by MME 170/2014 resolution. (6) Power plants with capacity below 1 MW are only required to be registered at ANEEL. (7) Average wind plant generation. 35

36 Copel Renováveis Wind Farm Complex São Bento On February 26, 2015 began the commercial operation of the Wind Complex São Bento, located in State of Rio Grande do Norte. The complex consists of 4 wind farms that have an installed capacity of 94.0 MW and assured power of 46.3 average MW. The energy produced was sold in the 2nd Alternative Sources Auction, held in 2010, the average price of R$134.52/MWh, as the following table: Wind Farm Auction ¹ Installed Capacity (MW) Assured Power (Average MW) Price ² Wind farm location Expiration of Authorization São Bento Boa Vista Apr-46 Olho d'água 2nd LFA May-46 São Bento do Norte São Bento do Norte (08/26/2010) May-46 Farol Apr-46 ¹ LFA - Auction of Alternative Sources. ² Historical price. Value will be adjusted by the IPCA. Interest in Generation Projects COPEL holds interests in six power generation projects at the operational stage, with a total installed capacity of 1,786.6 MW, 606 MW refered to COPEL s stake, as shown below: Company Installed Capacity (MW) Assured Power (Average MW) Partners PPA signed with Concession Expires TPP Araucária (UEG Araucária) COPEL - 20% COPEL GeT - 60% Petrobras - 20% ¹ Dec-29 HPP Santa Clara (Elejor) COPEL - 70% Paineira Participações - 30% COPEL Dis Free customers Oct-36 HPP Fundão (Elejor) HPP Dona Francisca (DFESA) SHP Júlio de Mesquita Filho (Foz do Chopim) HPP Lajeado (Investco S.A.) COPEL - 70% Paineira Participações - 30% COPEL - 23,03% Gerdau - 51,82% Celesc - 23,03% Desenvix - 2,12% COPEL - 35,77% Silea Participações - 64,23% COPEL - 0,82% CEB Lajeado - 16,98% Paulista Lajeado Energia S.A. - 5,94% EDP Energias do Brasil S.A. - 4,57% Lajeado Energia S.A. - 62,39% Furnas Centrais Elétricas S.A. - 0,21% Other - 9,09% COPEL Dis Free customers COPEL GeT Free customers Oct-36 Aug-33 Apr-30 ² Dec-32 ¹ Since February 1, 2014, the plant s operation has been under the responsibility of UEGA. The Araucária TPP does not have availability agreements and operates under the merchant model. ² The assets of the Lajeado HPP are leased to its other concession holders in proportional shares of the existing assets. 36

37 Under Construction Copel Geração e Transmissão Copel GeT is building two hydroelectric power plants that will add 405 MW to its total installed capacity, as described below. Power Plants Installed Capacity (MW) Assured Power (Average MW) Stake HPP Colíder % Copel GeT HPP Baixo Iguaçu % Copel GeT 70 % Geração Céu Azul S.A Total ¹ ¹ Adjusted for Copel s stake Colíder Hydroelectric Power Plant In ANEEL New Energy Auction 03/2010, held on July 30, 2010, Copel Geração e Transmissão S.A. won the concession for the implementation and operation of the Colíder HPP for 35 years. On January 17, 2011, the federal government and Copel GeT entered into 01/2011-MME-UHE Colíder Concession Agreement involving the use of public assets for electricity generation. The plant will have an installed capacity of 300 MW and assured energy of average-mw and is being implemented on the Teles Pires River, in Mato Grosso State. Investments are estimated at R$1.8 billion and start-up is scheduled for April On the base date of August 1, 2010, 125 average-mw were traded at R$103.40/MWh, restated by the IPCA consumer price index. The sold energy will be supplied for 30 years as of January 2015 and the remaining energy will be available for sale. The project is in the final stage of construction. Part of the dam is in the finishing stage, with coating being applied and the drainage system installed. The electromechanical equipment is being installed in the powerhouse. The first generating unit is in an advanced stage. Due to fortuitous events in early 2013, the construction schedule was hampered. Copel GeT is requesting the regulatory body to recognize an exclusion of liability for the delay in the power plant s start-up and has been fulfilling the Contract for Energy Trading in the Regulated Environment (CCEAR) since January 1, 2015, with energy from its own generation complex. Baixo Iguaçu Hydroelectric Power Plant COPEL owns a 30% interest in the Baixo Iguaçu Consortium, which is responsible for Baixo Iguaçu HPP construction and operation. The power plant will have an installed capacity of 350 MW and assured energy of average-mw and it is being built on the Iguaçu River, between the municipalities of Capanema and 37

38 Capitão Leônidas Marques, in southwest Paraná. Part of the energy that will be produced (121 average-mw) was sold in the 7th New Energy Auction, held on September 30, 2008, at R$98.98/MWh. The start of commercial operation (Unit 1 is scheduled to go into commercial operation on and Units 2 and 3 in January and February 2018 respectively) was altered because the Installation License was suspended. The works are suspended since June 2014 due to judicial issues. Copel Renováveis Wind Farm Complex Copel is expanding its energy generation matrix with renewable sources by building wind farm complexes in the State of Rio Grande do Norte State, consisting of 20 projects with a total installed capacity estimated at MW, as follows: Wind Farm Auction ¹ Installed Capacity (MW) ² Assured Power (Average MW) Price ³ Start up CAPEX (R$ million) Premium Value (R$ million) Wind farm location Expiration of Authorization Brisa Potiguar Nova Eurus IV Touros Apr-46 Nova Asa Branca I 2nd LFA S. Miguel Gostoso Apr-46 Mar Nova Asa Branca II (08/26/2010) Parazinho May-46 Nova Asa Branca III Parazinho May-46 Santa Maria João Câmara May-47 4th LER Apr-15 Santa Helena João Câmara Apr-47 (08/18/2011) Ventos de Santo Uriel Mar-15 João Câmara Apr-47 Cutia , Dreen Cutia Pedra Grande Jan-42 Dreen Guajiru Pedra Grande Jan-42 Esperança do Nordeste São Bento do Norte s 6 GE Jangada 6th LER (10/31/2014) Oct São Bento do Norte Jan-42 GE Maria Helena São Bento do Norte Jan-42 Paraíso dos Ventos do Nordeste São Bento do Norte s 6 Potiguar São Bento do Norte s 6 São Bento do Norte I São Bento do Norte s 6 São Bento do Norte II São Bento do Norte s 6 São Bento do Norte III 20th LEN São Bento do Norte s 6 Jan (11/28/2014) São Miguel I São Bento do Norte s 6 São Miguel II São Bento do Norte s 6 São Miguel III São Bento do Norte s 6 Total , ¹ Types of auctions: LFA - Auction of Alternative Sources / LER - Auction Reserve Energy / LEN - New Energy Auction. ² The installed capacity of the new projects can be optimized in relation to the registered at auctions. 3 Historical price. Value will be adjusted by the IPCA. 4 Aneel authorized the start-up test of the wind farms from February 27, The forecast for the commercial operation is April / The value the CAPEX corresponds to the recorded in EPE. 6 In granting / authorization process. In November 2014, COPEL acquired 100% of the wind farm projects belonging to Rodrigo Pedroso Energia Ltda. RPE Energia, located in the State of Rio Grande do Norte.The complex comprises 6 wind farms (São Bento do Norte I, II and III, São Miguel I, II and III) with a total capacity of MW and assured energy of 54.8 average MW. All the energy to be generated by the Complex was sold at the 20 th New Energy Auction (A-5) through availability agreements at R$136.97/MWh with a 20-year supply term. The wind turbines will be supplied by WEG, while the electrical and civil construction works will be executed by SIMM Empreendimentos and 38

39 DoisA Engenharia, respectively, companies specialized in the wind power market, based in Natal, State of Rio Grande do Norte. Interest in Wind Farms COPEL has recently acquired from Voltalia Energia do Brasil Ltda. Voltalia a 49% interest in the São Miguel do Gostoso wind farm complex, in the State of Rio Grande do Norte. The São Miguel do Gostoso wind farm complex, which is already under implementation, comprises four wind farms, 108 MW installed capacity, whose energy was sold in the Fourth Reserve Energy Auction by avarege price R$98,92 MWh, under twenty-year contracts, with supply beginning in April, Wind Farm Installed Capacity¹ (MW) Assured Power (Average MW) Price² Start up CAPEX³ (R$ million) Stake (%) Wind farm location Expiration of Authorization Voltália - São Miguel do Gostoso I Carnaúbas Apr-47 Reduto % COPEL São Miguel do Apr Apr/15 Santo Cristo % Voltalia Gostoso (RN) Apr-47 São João Mar-47 Total ¹ The capacity envisaged in the Auction was altered based on the characteristics of Acciona Windpower s equipment, respecting the volume of energy sold. ² Historical price. Value will be adjusted by the IPCA. ³ CAPEX estimated by Brazilian Electricity Regulatory Agency (Aneel) on the date of the auction. COPEL now has MW of installed capacity Estimated at Wind Projects under construction. Additionally, COPEL has Wind Projects que adding 159 MW in the portfolio, see more details in item Transmission In Operation The table below presents COPEL s transmission concession agreements and the main features of its transmission lines and substations: 39

40 Subsidiary / SPC Contract Enterprise TL Substation Extension (km) Amount MVA APR ¹ (R$ million) Concession Expiration Copel GeT 060/2001 Several 1, , Dec-42 Copel GeT 075/2001 TL Bateias - Jaguariaiva Jul-31 Copel GeT 006/2008 TL Bateias - Pilarzinho Mar-38 Copel GeT 027/2009 TL Foz - Cascavel Oeste Nov-39 Copel GeT 015/2010 Cerquilho III Substation Oct-40 Subtotal Copel GeT ² 2, , Costa Oeste Copel Get - 51% Eletrosul - 49% 001/2012 TL Cascavel Oeste - Umuarama Sul Umuarama Sul Substation Jan-42 Transm. Sul Brasileira Copel GeT - 20% Eletrosul - 80% 004/2012 Nova Sta Rita - Camaquã May-42 Caiuá Transmissora Copel GeT - 49% Elecnor - 51% 007/2012 TL Guaíra - Umuarama Sul TL Cascavel Norte - Cascavel Oeste Santa Quitéria Substation / Cascavel Norte Substation May-42 Integração Maranhense Copel GeT - 49% Elecnor - 51% 011/2012 TL Açailandia - Miranda II May-42 Subtotal SPCs ³ 1, , Total 3, , ¹ Refered to COPEL's stake. ² Consolidated Financial Statement. ³ Equity in Earning of Subsidiaries. Under Construction Copel Get is substantially increasing its share of the transmission segment through own investments and partnerships in SPCs. The projects have a joint total of 4,472 km of transmission lines and 11 substations and will generate APR of R$660.1 million, R$338.4 million of which refers to Copel Get stake. COPEL s interest in the transmission projects is available in the table below: 40

41 Subsidiary / SPC Auction Signing of Contract Enterprise State km Subst Partnerships RAP¹ (R$ million) CAPEX ² (R$ million) Start up Concession Expiration Copel GeT 001/10 Oct-10 TL Araraquara II Taubaté SP % COPEL GeT Mar-16 Oct-40 TL Londrina - Figueira Apr-15 Aug-42 Copel GeT 005/12 Aug-12 PR 100% COPEL GeT 37.0 TL Foz do Chopim - Salto Osório Mar-15 Aug-42 TL Assis Paraguaçu Paulista II 37 - Dec-15 Feb-43 Copel GeT 007/12 Feb-13 SP 100% COPEL GeT Paraguaçu Paulista II Substation - 1 Sep-15 Feb-43 Copel GeT 007/13 Jan-14 TL Bateias - Curitiba Norte PR % COPEL GeT Jan-16 Jan-44 Copel GeT 001/14 Sep-14 TL Foz do Chopim - Realeza PR % COPEL GeT Mar-17 Sep-44 Copel GeT 001/14 Sep-14 TL Assis Londrina SP / PR % COPEL GeT Sep-17 Sep-44 Subtotal Copel GeT Marumbi 006/11 May-12 TL Curitiba - Curitiba Leste PR 28 1 Matrinchã 002/12 May-12 TL Paranaíta - Ribeirãozinho MT 1,005 3 Guaraciaba 002/12 May-12 TL Ribeirãozinho - Marimbondo Paranaíba 007/12 May-13 TL Barreiras II - Pirapora II Mata de Santa Genebra MT / GO / MG BA / MG / GO /13 May-14 TL Araraquara II - Bateias SP / PR Cantareira 001/14 Sep-14 TL Estreito - Fernão Dias SP / MG % Copel GeT 20% Eletros ul 49% Copel GeT 51% State Grid 49% Copel GeT 51% State Grid 24,5% Copel GeT 24,5% Furnas 51% State Grid 50,1% Copel GeT 49,9% Furnas 49% Copel GeT 51% Elecnor Apr-15 May Jul-15 May Jul-15 May May-16 May Oct-17 May Mar-18 Sep-44 Subtotal SPC 3, ,737.3 Total 4, ,335.1 ¹ Update according to Aneel Ratification Resolution 1756/2014 (R$ milion) / Adjusted for Copel s stake. ² ANEEL reference value (R$ million) / Adjusted for Copel s stake. 8.3 Distribution In the distribution business, COPEL serves more than 4.3 million energy consumers in 1,113 locations, belonging to 394 municipalities in Paraná and one in the State of Santa Catarina. Copel Distribuição operates and maintains the installations in the 34.5 kv, 69 kv, 138 kv and some of 230 kv voltage levels. Voltage Km Substations MVA 13,8 kv 101, ,5 kv 82, , kv , kv kv 5, , kv Total 189, , Not automated. 41

42 Compact-Design Distribution Lines Copel Dis has continued to implement compact-design distribution lines in urban areas with a high concentration of trees surrounding the distribution grids. This technology reduces the number of trees cut down or trimmed, and improves the quality of power supply by reducing the number of unplanned outages. The total length of compact-design distribution lines in operation on December 31, 2014 was 6,537 km. Secondary Isolated Lines Copel Dis has also invested in low-voltage (127/220V) secondary isolated lines, which offer substantial advantages over regular overhead lines, including: improvement in DEC and FEC distribution performance indicators, defense against illegal connections, improved environmental conditions, reduced areas subject to tree trimming, improved safety, reduced voltage drops throughout the grid, and increased transformer useful life, due to the reduction of short-circuits, among other advantages. The total length of installed secondary isolated lines closed 2014 at 12,364 km. Quality of Supply The two main indicators of power supply quality are DEC (outage duration) and FEC (outage frequency). The trends for these indicators, as well as for average waiting times, are shown below: Jan-Dec DEC ¹ (hours) FEC ² (outages) Waiting time (hours) : : : : :49 ¹ DEC measured in hours and hundredths of an hour ² FEC expressed in number of interruptions and hundredths of a number of interruptions year to date 42

43 8.4 Telecommunications Copel Telecomunicações has a optical backbone, a high capacity intermunicipal transmission network, and the access, a customer service network. The access network can be multi-point (GPON) or point-to-point (conventional), thus connecting the customer to the network's transmission Copel Telecom and providing the contracted services. In December 2014, the backbone cable network extended for 9,621 km and the access network extended for 17,728 km. Currently, we serve the 399 municipalities in the State of Paraná and another two in Santa Catarina. Copel Telecom has substantially expanded its customer base in recent years, as shown below. Number of Clients - Copel Telecomunicações Copel Telecomunicações Fiber Optic Network Map of the State of Paraná 43

44 8.5 Equity Interests Other Sectors COPEL holds interests in companies in the gas, telecommunications, sanitation and service sectors, as shown below: Company Sector Partners Dominó Holdings S.A. Sanepar Compagas Paraná Gás Exploração e Produção S.A Sercomtel S.A. Telecom Sanitation Sanitation Gas Oil and natural gas Telecommunications COPEL % Andrade Gutierrez % COPEL - 7.6% State of Paraná % Dominó Holdings S.A. - 12,2% Daleth Participações - 8.3% Andrade Gutierrez - 2.1% Other - 11,1% COPEL % Mitsui Gás % Gaspetro % COPEL % Petra Energia % Bayar Participações -30.0% Tucumann Engenharia % COPEL % Município de Londrina % Carbocampel S.A. Coal mining COPEL % Carbonífera Cambuí % Escoelectric Ltda Copel-Amec Ltda 2 1 Operating Company. 2 Being liquidated. Services Services COPEL % Lactec % COPEL % Amec % Lactec - 4.5% 44

45 Accounting Information Accounting information concerning COPEL s interests in other companies in 2014 is shown in the following table: Parent Company Partnerships Total Assets Shareholders' Equity Net Oper. Revenues Net Income Compagas S.A. 634, ,026 1,748,045 60,366 Elejor S.A. 719,621 84, ,205 19,185 UEG Araucária Ltda 1,236, ,320 2,134, ,655 Jointly-controlled entities Costa Oeste Transmissora de Energia S.A. 92,086 44,572 43,468 2,583 Caiuá Transmissora de Energia S.A. 223,527 91,349 78,290 4,102 Mata de Santa Genebra S.A 102,176 52,198 61,493-2,301 Dominó Holdings S.A. 470, ,866-83,093 Guaraciaba Transmissora de Energia (TP Sul) S.A. 751, , ,024 32,207 Integração Maranhense Transmissora de Energia S.A. 377, ,421 92,381 7,228 Marumbi Transmissora de Energia S.A. 128,894 46,172 87,434 11,639 Matrinchã Transmissora de Energia (TP Norte) S.A. 1,551, , ,467 62,352 Paranaíba Transmissora de Energia S.A. 654, , ,982 12,950 Transmissora Sul Brasileira de Energia S.A. 730, , ,965 13,998 Cantareira Transmissora S.A 34,836 31,169 29, Voltália São Miguel do Gostoso Participações S.A 107, ,981-2,405 Associates Sanepar 7,452,990 3,702,336 2,617, ,586 Dona Francisca Energética S.A. 260, , ,859 43,756 Foz do Chopim Energética Ltda 44,977 41,674 40,180 23,671 1 This data was adjusted to COPEL's practices. R$' New Projects Project Portfolio COPEL holds interests in different power generation projects. When these projects go into commercial operation, they will add MW of installed capacity to the Company's portfolio. 45

46 Project Estimated Installed Capacity (MW) Estimated Assured Power (Average MW) SHP COPEL' Stake (%) SHP Bela Vista SHP Dois Saltos SHP Foz do Curucaca SHP Salto Alemã SHP São Luiz SHP Pinhalzinho SHP Alto Chopim SHP Burro Branco SHP Rancho Grande SHP Foz do Turvo HPP HPP São Jerônimo WPP WPP Complexo Alto Oriente WPP Complexo Jandaia Total ¹ The installed capacity of the new projects can be optimized in relation to the registered at auctions. São Jerônimo Hydroelectric Power Plant The project comprises the future São Jerônimo Hydroelectric Power Plant, with an estimated installed capacity of 331 MW, located on the Tibagi River, in the State of Paraná. This project s implementation will be based on the concession for the use of public assets in ANEEL Auction Notice 02/2001 and has been awarded to Consórcio São Jerônimo, in which COPEL holds a 41.2% interest. The beginning of the works depends on authorization by the National Congress, pursuant to article 231, paragraph 3 of the Federal Constitution, as the plant s reservoir is in indigenous areas. Interest in Feasibility Study Hydroelectric Potential Surveyed Along the Piquiri River The feasibility studies for the four hydroelectric power plants making up the hydroelectric potential of the Piquiri River, in Paraná, were submitted by Copel Get and accepted by ANEEL in The following table features these plants, which have a joint installed capacity MW: Project Estimated Installed Capacity (MW) HPP Apertados¹ HPP Comissário HPP Foz do Piquiri 93.2 HPP Ercilândia¹ 87.1 Total ¹ Projects pre-qualified for the 20th A-5 auction. Pending Preliminary Environmental License. 46

47 The public hearings for the Apertados and Ercilândia hydroelectric power plants were held in November 2014, thus fulfilling one of the legal requirements for the respective environmental licenses to be issued. The environmental license applications are currently being reviewed by the Environmental Institute of Paraná State. The preliminary environmental license is a condition for the technical qualification of the projects in the new energy auctions promoted by ANEEL. Tapajós Hydroelectric Complex COPEL entered into a Technical Cooperation Agreement with eight other companies to conduct studies on the Tapajós and Jamanxim Rivers in Brazil s North Region, including the environmental assessment of the Tapajós River Basin and the feasibility of the Tapajós River Complex, comprising five plants with a joint installed capacity of over 12 thousand MW. The plants currently under study are: Jatobá, with 2,338 MW, and São Luiz do Tapajós, the biggest, with 8,040 MW, both on the Tapajós River. On the Jamanxim River, the Company will be studying the Cachoeira do Caí, Cachoeira dos Patos and Jamanxim Hydroelectric Power Plants. The Technical and Economic Feasibility Study of the São Luiz do Tapajós Hydroelectric Power Plant (EVTE) was submitted to ANEEL for examination in April The document contains a study of the technical and economic conditions that comprise one of the feasibility aspects of building the plant and will be an integral part of the documentation included in the invitation to bid for the plant s concession. The Environmental Impact Assessments and Environmental Impact Reports (EIA/RIMA) were concluded and delivered to IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) in May The Company is awaiting for the public hearings to be scheduled. At the moment, the situation of indigenous peoples is under study. Technicians from FUNAI (National Indian Foundation) are studying the possible impacts on indigenous communities. Oil and Gas Exploration and Production On November 28, 2013, in the 12th round of Bids of the National Petroleum Agency (ANP), the consortium formed by COPEL (30%), Bayar Participações (30%), Tucumann Engenharia (10%) and Petra Energia (30%) (the latter acting as operator) won the right to explore, develop and produce oil and natural gas in four blocks in an 11,327-km² area in the midwestern region of the State of Paraná. The consortium s total investment will come to R$ 78.1 million in the first phase of exploration, for the term of four years granted by the ANP. COPEL and its partners Bayar, Tucumann and Petra signed concession contracts for 2 blocks in May The activities of the first phase of exploitation by the consortium are suspended in the other blocks due to a public-interest civil action, as a result the respective concession contracts have yet to be signed. Signature Bonus: R$12.5 million Exploration Program: R$78.1 million 47